VAT goes digital - the tax practitioners' perspective

December 9, 2022

During a conference organized by the European Tax Adviser Federation (ETAF) on 7 December 2022, tax advisers discussed with Patrice Pillet, Head of Unit VAT at the European Commission, how the package “VAT in the digital age” (ViDA) will affect our profession and what are its expected benefits, just one day before its official adoption on 8 December.

In his welcome address, ETAF President Philippe Arraou spoke about the impact of e-invoicing on the profession. “Electronic invoicing, associated with necessary regulatory changes, will undoubtedly modify the landscape of our profession. And we are quite ready for that!”, he said.

“We shouldn’t see digitalization only as a challenge for the profession. It will above all be an opportunity as it will allow us to continue to focus more on the core business of our work: the tax advice”, Mr Arraou added.

For this reason, ETAF very much welcomes and supports the staged approach on e-invoicing and digital reporting proposed in the new package.

The proposed quasi real time access to invoicing information through an EU central database would save EU businesses over 4.1 billion euros per year on average in compliance costs over the next ten years, Patrice Pillet estimated.

For Dr. Stefanie Becker, the ETAF representative in the Commission’s VAT expert group, the existing fragmentation of e-invoicing systems makes it really difficult for businesses to work cross-border and it is urgent to have a solution at EU level. “Every country has its own tax rules, its own tax administration, its own amount of fraud. So it is also important to have the possibility to build a system that nevertheless fits your own country needs”, she pointed out.

Olivier Hody, Tax Adviser ITAA and Partner at the Deloitte Global Tax Center Europe, highlighted the concerns of the profession with the entrance of new e-invoicing players on the market and the potential “uberisation risk”. “Some of these companies could step into compliance and accountancy activities. They are totally unregulated. So the question from ETAF members is how can we guarantee that we have the same degree of data confidentiality, professional secrecy and quality than for traditional tax professionals?”

The Commission is hoping that the VAT gap in the EU will decrease thanks to this new package of measures and that it will allow Member States to start again the talks on the VAT definitive regime. “The VAT definitive regime is still needed. But the reason why it is blocked is the lack of trust between Member States.  VAT gaps in Europe are ranging from 1.4% to 35%. It is hard for us to convince a Member State with a VAT gap of 1% to get its VAT collected by another Member State with a 35% VAT”, Mr Pillet explained.

Speakers also discussed the two other pillars of the package: the updated VAT rules for passenger transport and short-term accommodation platforms as well as the introduction of a single VAT registration across the EU.

“Not everything will enter into force next year. It will be a process. The directive is really based on the idea of a roadmap composed of very easy reforms which can be put in place very quickly – like the single VAT registration – and longer-term reforms such as a central database on intra-EU invoices or the convergence of the domestic systems”, he concluded.

Notes to editors:

Our event can be watched again online here: https://etaf.tax/conferences/

The VAT in the digital age package has been published here: https://taxation-customs.ec.europa.eu/taxation-1/value-added-tax-vat/vat-digital-age_en

For media enquiries, please contact: Marion Fontana, EU Policy Officer, [email protected], Phone: +32 2 2350 105 | Mobile: +32 471 78 90 64

ETAF is a registered organisation in the EU Transparency Register, with the register identification number 760084520382-92.

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